Thursday, September 3, 2009

The European Union statistics office Eurostat confirmed its earlier estimate that the gross domestic product of the 16 countries using the euro fell 0.1 percent quarter-on-quarter after a 2.5 percent drop in the first three months of 2009.

"The worst is over for the time being," the chairman of euro zone finance ministers, Jean-Claude Juncker, told reporters before talks in Brussels among his Eurogroup colleagues and the European Central Bank.

Second-quarter GDP was 4.7 percent lower than a year earlier, after a 4.9 percent fall in the first quarter.

"Shrinking times are over and the recovery can set in," said Carsten Brzeski, economist at ING. "The recent data inflow indicates that the euro zone as a whole should leave technical recession in the third quarter."

Euro-zone industrial producer prices posted their sharpest drop in annual terms for more than 27 years in July, fueled by a record fall in energy costs, data from European Union statistics agency Eurostat showed Wednesday.

Factory gate prices fell 0.8% compared with the previous month and were 8.5% lower than in July last year, the biggest annual drop since comparable records began in 1982, Eurostat said. In June, producer prices rose a revised 0.4% from the previous month and were 6.5% lower on the year.

"Over the coming months, headline PPI inflation should start to pick up, as the impact of last year's spike in oil prices drops out of the annual comparison," Colin Ellis, an economist at Daiwa Securities SMBC Europe, said in a note. "But with the recession having opened up a wide margin of spare capacity in the economy, underlying inflationary pressure is likely to remain weak for some time."